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A two-level hierarchical structure is proposed to improve power systems stability under severe contingencies. The solution consists of a local controller for each generator at the first level helped by a multivariable central one at the secondary level. The secondary level controller uses remote signals from all the generators to synthesize two outputs, which decouple the subsystems dynamics hence maximizing the local controllers' performances. The first level controllers use local signals exclusively to dampen local oscillations. A systematic procedure for the design of the wide-area signals based controller is given and is based on a reformulation of the multimachine power system model into a suitable and closed form. The hierarchical structure is used on a realistic power system and simulation results show that the system stability is considerably improved. A power system, unstable under the classical controllers (AVR-PSS/GOVERNOR), is rendered stable when we combine the central and local controllers' actions.